IN THE MATTER OF GENERAL RULES AND REGULATIONS WITH RESPECT TO THE CONSERVATION OF OIL AND GAS IN THE STATE OF COLORADO, AND RULES OF PRACTICE AND PROCEDURE PERTAINING THERETO AND IN PARTICULAR WITH REFERENCE TO RULE 323

BEFORE THE OIL AND GAS CONSERVATION COMMISSION

OF THE STATE OF COLORADO

IN THE MATTER OF THE PROMULGATION AND ESTABLISHMENT OF FIELD RULES TO GOVERN OPERATIONS IN THE CODELL-NIOBRARA SPACED AREA, THE WATTENBERG GAS SPACED AREA AND THE WATTENBERG FIELD, WELD COUNTY, COLORADO

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CAUSE NOS. 407, 232, and 499

ORDER NOS. 407-217, 232-162

and 499-21

REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on June 24, 1996, in Suite 801, The Chancery Building, 1120 Lincoln Street, Denver, Colorado, after giving Notice of Hearing, as required by law on the application of Snyder Oil Corporation for an order to amend Cause Nos. 407, 232, and 499 to allow the Travellers [sic] No. 28-11M Well to be recompleted at an exception location 1,579 feet FSL and 1,444 feet FWL, in the NE¼ SW¼ of Section 28, Township 2 North, Range 68 West, 6th P.M., for production from the Codell and Niobrara Formations and to commingle with production from the Dakota and "J" Sand Formations.

FINDINGS

The Commission finds as follows:

1. Snyder Oil Corporation as applicant herein, is an interested party in the subject matter of the above referenced hearing.

2. Due notice of the time, place and purpose of the hearing has been given in all respects as required by law.

3. The Commission has jurisdiction over the subject matter embraced in said Notice, and of the parties interested therein, and jurisdiction to promulgate the hereinafter prescribed order.

4. In Order No. 407-1, the Commission established 80-acre drilling and spacing units for the production of oil and/or gas and associated hydrocarbons from the Codell Formation. Wells shall be located in the center of the 40-acre tract or quarter-quarter section with a tolerance of 200 feet in any direction. In Order Nos. 407-10 and 407-13, the Commission amended Order No. 407-1 to include production from the Niobrara Formation in certain lands and to allow the downhole commingling of production from the Codell and Niobrara Formations, including Section 28, Township 2 North, Range 68 West, 6th P.M.

5. In Cause No. 232, the Commission established 320 acre drilling and spacing units for the production of gas from the "J" Sand in the Wattenberg Field with one well allowed for each unit to be located in the NE¼ and SW¼ and no closer than 990 feet to the boundaries of the quarter section. On August 21, 1979, the Commission issued Order No. 232-20 which allowed a second well to be drilled on each 320-acre unit, including Section 28, Township 2 North, Range 68 West, 6th P.M.

6. In Order No. 499-1, the Commission established 320-acre drilling and spacing units for the production of oil, gas and associated hydrocarbons from the Dakota Formation, identical to the 320-acre drilling and spacing units previously established for the "J" Sand Formation required by Cause No. 232, with the permitted well to be located in the NW¼ and the SE¼ of the section and no closer than 990 feet to the boundaries of the quarter section, for certain lands, including Section 28, Township 2 North, Range 68 West, 6th P.M. Subsequent orders included additional lands, allowed the permitted well to be located in any of the quarter sections and approved the downhole commingling of production from the Dakota Formation with production from the "J" Sand Formation, Codell, Niobrara and Sussex Formations.

7. In Order Nos. 499-15, 232-89, 407-125, 493-22, and 496-3, the Commission, among other things, allowed the downhole commingling of production from the Dakota and "J" Sand Formations with production from the Codell, Niobrara, Sussex, and Shannon Formations, including Section 28, Township 2 North, Range 68 West, 6th P.M.

8. In Order Nos. 499-17, 232-94, 407-134 and 493-26, the Commission approved the proposed allocation formula for this well.

9. This matter was heard by the Hearing Officer who recommends approval based upon the testimony presented at the administrative hearing that an exception to the permitted well location is necessary to reduce surface impact and recover additional reserves from the Codell and Niobrara Formations.

10. An order of the Commission should be entered allowing the Travellers [sic] No. 28-11M Well to be recompleted at an exception location 1,579 feet FSL and 1,444 feet FWL, in the NE¼ SW¼ of Section 28, Township 2 North, Range 68 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the N½ SW¼ of Section 28, and to allow the commingling of production with the Dakota and "J" Sand Formations, for the 320-acre drilling and spacing unit consisting of the S½ of Section 28.

ORDER

NOW, THEREFORE, IT IS ORDERED, that Order Nos. 499-5, 232-68, 407-103 and 493-13 shall be amended to allow the Travellers [sic] No. 28-11M Well to be recompleted at an exception location 1,579 feet FSL and 1,444 feet FWL, in the NE¼ SW¼ of Section 28, Township 2 North, Range 68 West, 6th P.M., for production from the Codell and Niobrara Formations, for the 80-acre drilling and spacing unit consisting of the N½ SW¼ of Section 28, and to allow the commingling of production with the Dakota and "J" Sand Formations, for the 320-acre drilling and spacing unit consisting of the S½ of Section 28.

IT IS FURTHER ORDERED, that the provisions contained in the above order shall become effective forthwith.

IT IS FURTHER ORDERED, that the Commission expressly reserves its right, after notice and hearing, to alter, amend or repeal any and/or all of the above orders.

ENTERED this 3rd day of July, 1996, as of June 24, 1996.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

Patricia C. Beaver, Secretary

Dated at Suite 801

1120 Lincoln Street

Denver, Colorado 80203

July 3, 1996